ISP Not Liable for its Users' Copyright Infringement

Posted on: 1 Mar, 2010 |
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Landmark Common Sense Decision

The decision in the much anticipated Roadshow Films Pty Ltd
v iiNet Limited (No 3) [2010] FCA 24 was handed down on 4
February 2010 to much fanfare, with internet service providers
(ISPs) and users applauding Justice Cowdroy's
rational, coherent decision. The case concerned the potential
liability of an ISP for the copyright infringement of its users, in
particular whether iiNet had "authorised" the infringement. It was
found that the ISP was not responsible for the copyright
infringement of its users (occurring while the users were using the
ISP's internet service), nor had it "authorised" the
infringement.

Background

In November 2008, 34 major film studios and their Australian
licensees instituted proceedings against iiNet, Australia's third
largest ISP, seeking declarations that iiNet had infringed the
copyright in films and television programs owned by the applicants
by authorising their subscribed users to make copies of the films
and communicate the films to the public, pursuant to s101 of the
Copyright Act 1968 (Act). The films
included I am Legend, Ocean's 13,
Shooter, Atonement, Batman Begins and
Blood Diamond, to name a few. The Australian Federation
Against Copyright Theft (AFACT) had conducted
investigations into the alleged infringements and was, on behalf of
the applicants, prominent in the conduct of the claim.

AFACT investigated the alleged infringements by means of the
'BitTorrent' protocol, a peer to peer file-sharing system employed
by users to download and share materials over the internet. The
BitTorrent system is a highly efficient and decentralised means of
distributing data (both legitimate and that which infringes the
copyright of others) across the internet. This engaging summary was
used by Cowdroy J to describe the technology:

"To use the rather colourful
imagery that internet piracy conjures up in a highly imperfect
analogy, the file being shared in the swarm is the treasure, the
BitTorrent client is the ship, the torrent file is the treasure
map, The Pirate Bay provides treasure maps free of charge and the
tracker is the wise old man that needs to be consulted to
understand the treasure map."

It is important to note that a film or program downloaded via
the BitTorrent protocol is broken into various pieces that are
downloaded together and, once they have all been downloaded, the
whole film or program can be viewed.

During the course of its investigations, AFACT sent regular
notices to iiNet setting out each instance of a user allegedly
infringing the applicant's copyright via the BitTorrent system.
AFACT demanded that iiNet take action to prevent the infringements
from occurring by sending warnings to the alleged infringing
subscribers. If the warning was not heeded, then AFACT expected
iiNet to suspend the internet service of the user. iiNet did not
take any action in relation to these notices.

Primary Infringement

Before it could be determined whether iiNet had authorised any
copyright infringement, it first had to be found that iiNet's users
had in fact infringed the copyright of the applicants (primary
infringement). iiNet conceded that there had been infringement by
its users, but the extent of the infringement needed to be
ascertained, namely how many times each user had infringed. Cowdroy
J noted:

"BitTorrent use is an ongoing
process of communication for as long as one wishes to participate.
Therefore, the term 'electronically transmit' cannot sensibly be
seen in that context as anything other than a single ongoing
process, even if the iiNet user transmits more than 100% of the
film back to the swarm."

Accordingly, it was found that each iiNet user "made available
online" and "electronically transmitted" each film only once. The
applicants were found to have proven primary infringement by
iiNet's users.

Authorisation

The court considered a number of previous decisions on the
authorisation of copyright, namely Moorhouse[1],
Kazaa[2] and Cooper[3]. The court noted in
Moorhouse that there were three issues to consider when
investigating an alleged authorisation of infringement, namely the
means, the knowledge of the infringement and the power to control.
In Moorhouse, the University provided the means (books and
copying machines in the library), had the knowledge of the
infringement (reasonable grounds to suspect that some infringements
would be made if adequate precautions were not taken) and had the
power to control both the use of the books and the use of the
machines. In Moorhouse, it was important that both the books and
the copier were necessary to the finding of authorisation - and
that it was the provision of the copier in a library.

Justice Cowdroy stated that "context is all important in
authorisation proceedings" and distinguished the present case from
that of Cooper:

"While the liability of Comcen
for copyright infringement in Cooper suggests that it is
possible for an ISP to authorise infringement, it is important to
observe the very specific factual circumstances in which
authorisation was found. Comcen has directly dealt with, and
assisted in the creation of, the particular 'means' of infringement
(the website), and had even entered into an agreement with its
owner to provide for hosting of that website free of
charge."

Accordingly, Cowdroy J found:

"The Court finds that it is not
[iiNet], but rather it is the use of the BitTorrent system as a
whole which is the 'means' by which the applicants' copyright has
been infringed. [iiNet's] internet service, by itself, did not
result in copyright infringement. It is correct that, absent such a
service, the infringements could not have taken place. But it is
equally true that more was required to effect the infringements,
being the BitTorrent system over which [iiNet] had no control…There
is no evidence before this Court that [iiNet] has any connection
whatsoever with any part of the BitTorrent system."

Finally, Cowdroy J considered that warning users and terminating
user accounts on the basis of AFACT warning notices was not a
reasonable step for iiNet to take to prevent infringements
occurring, and therefore it was not incumbent on iiNet to stop the
infringements. In concluding the authorisation issue, the court
said:

"The Court accepts [iiNet] had
knowledge of the infringements occurring. The Court accepts that it
would be possible for the respondent to stop the infringements
occurring. However, the Court has found as a matter of fact that
[iiNet] did not authorise the infringement committed by the iiNet
users".

Other issues

Given the court found that iiNet had not authorised copyright
infringement, it did not need to determine various other aspects of
the applicant's claim. It should be noted, however, that the court
still considered the 'safe harbour' provisions of the Act and
considered that, if the court had erred in its finding regarding
authorisation, the court would find that iiNet had adopted and
implemented a reasonable repeat infringer policy and had therefore
satisfied the safe harbour provisions. Defences under the Telco Act
were also considered, as was s112E of the Act.

Conclusion

Overall, the court found that iiNet did not authorise copyright
infringement, as "the mere provision of access to the internet is
not the 'means' of infringement". Cowdroy J recognised that the
applicants would be disappointed, given the evidence established
that copyright infringement of the applicants' films was occurring
on a large scale. However, he went on to say that "… such fact does
not necessitate or compel, and can never necessitate or compel, a
finding of authorisation, merely because it is felt that 'something
must be done' to stop the infringements…iiNet is not responsible if
an iiNet user chooses to make use of that [BitTorrent] system to
bring about copyright infringement. The law recognises no positive
obligation on any person to protect the copyright of another". The
applicant studios were ordered to pay iiNet's costs in the
matter.

ISPs and users have lauded this decision, yet copyright owners
have been left scratching their heads. Now that the authorisation
of infringement route has failed in relation to ISPs like iiNet (at
least until the decision is overturned or there is a change in
legislation), effectively copyright owners are left to protect
their copyright themselves.

The court has provided us with a clear, easy to read decision
for now, but the copyright war is far from over - we must now take
stock and wait for the next chapter. Particularly in light of the
fact that the applicants lodged an appeal against Justice Cowdroy's
decision on 25 February 2010.